Brendan Cahill: one of the owners of P&ID: snubbed FG’s
improved offer of $600m
A fact-sheet now in circulation
has debunked accusations by Messrs Process and Industrial Developments
(P&ID) that Nigerian officials were indifferent to their offers to settle,
before a UK commercial court gave it a humongous and world record $9.6billion award
on a failed gas supply deal.
According to the fact-sheet,
President Muhammadu Buhari and Vice-President Yemi Osinbajo separately approved
negotiation with Messrs Process and Industrial Developments (P&ID) after
the Arbitration Tribunal awarded $6.597billion to the company. The two leaders
at various times offered $250million and an improved offer of $600million to
the Irish company.
The Vice President gave the
approval on April 18, 2017, following the recommendations of the
Attorney-General of the Federation (AGF) and Minister of Justice, Mallam
Abubakar Malami (SAN), which included a negotiation with P&ID.
Also, President Muhammadu Buhari
directed the Federal Government’s team to meet with P&ID counsel on July 12
and 13 in New York.
Based on Osinbajo’s approval, the
AGF and the then Minister of State for Petroleum Resources Dr. Ibe Kachikwu,
and a delegation along with counsel Chief Bolaji Ayorinde, SAN, on May 16,
2017, met with representatives of P & ID and its counsel to negotiate the
judgment debt.
The government team initially on
May 16, 2017 succeeded in negotiating the judgment debt from $8.4billion, to
which it had risen, to $600million.
But P & ID rejected the offer
on the grounds that what was agreed on to be executed was a Draft Stay of
Enforcement Agreement and not a Settlement Agreement as proposed by the Federal
Government.
The Federal Government offered
$250million which P&ID rejected.
The document said although a
former Attorney-General of the Federation, Mr. Mohammed Bello Adoke (SAN),
recommended an amicable settlement with P&ID, the “ proposed settlement
broke down.”
The government said the
“settlement could not be reached before the time for report of settlement
elapsed, therefore proceedings resumed at the Tribunal for determination.”
The fact-sheet gave insight into
how the nation ran into a deeper crisis on the gas agreement with P&ID.
“The above -mentioned arbitration
was commenced against the Ministry of Petroleum by Messrs Process &
Industrial development (P&ID), a limited liability company, with which the
Ministry of Petroleum signed a Definite Agreement dated 11th January 2010 for
Accelerated Gas Development in OML 123 and 67 for a period of 20 years.
“In the year 2009, the Federal
Government of Nigeria signed a Definite Agreement for Accelerated Development
Policy with eight (8) companies, one of which was Process & Industrial
Development Company (P&ID).
“Following the inability of the
parties to implement the Agreement as envisaged, P&ID commenced the above
arbitration initially claiming the sum of US$1.9 Billion against the ministry
of Petroleum, and thereafter increased its claim to US$5.9Billion and has now
recently submitted a final claim of US$8.1Billion.
“The former Honourable Attorney
General of the Federation (Adoke SAN) engaged the services of Olasupo Shasore,
SAN, of Twenty Marina Solicitors LLP to represent the Federal Government in the
matter.
“Shasore raised a preliminary
Objection challenging the competence of the action which was overruled by the
arbitration Tribunal in its ruling of 3rd July 2014. The Ministry of Petroleum
Resources also engaged the services of United Kingdom (UK)-based law Firm
Stephenson Harwood to apply for extension of time within which to the Federal
Government can challenge the arbitration award dated July 2014 in the UK.
“On the advice of the former
Honourable Attorney General of the Federation, the Federal Government opted for
an amicable settlement with P&ID. The proposed settlement broke down
because the settlement could not be reached before the time for report of
settlement elapsed, therefore proceedings resumed at the Tribunal for
determination.”
“In 2014, the Tribunal rendered a
partial award wherein it ruled on the preliminary issues and held that it has
jurisdiction in the matter that the seat of arbitration is London which is in
line with the contract between the parties.
“The Nigerian Counsel (Mr Olasupo
Shashore) in reaction, engaged the UK Law Firm of Stephenson Harwood LLP to set
aside the award on liability in the UK but the court dismissed the application
for setting aside on the grounds that the application was filed Four (4) months
after the expiry of the deadline of such challenges and the grounds for appeal
had no merits.
“Shasore applied two weeks later
to the Federal High Court in Nigeria, which issued a 3-page order in 2016
setting aside and/or remitting for further consideration or part of the
liability award.
“By this time, the tribunal had
already issued a procedural order affirming London as the seat of arbitration
and further stated that the failure of Federal Government to satisfy its
contractual obligation constituted a repudiation of the 2010 agreement and
adjourned its proceedings for hearing on Quantum of damage.”
The fact-sheet said the Ministry
of Petroleum Resources handed over to the Ministry of Justice after the
Arbitration Tribunal gave a final part award in 2016.
“After the hearing on liability,
wherein the Tribunal gave a part final award holding the Ministry of Petroleum
Resources (MPR) liable in breach of the contract, MPR forwarded the case file
to the HAGF/MJ to take over the matter for effective handling.
“Upon taking over the case, Chief
Bolaji Ayorinde, SAN was engaged by the Honourable Attorney General of the
Federation (HAGF) in 2016 to handle the hearing on Quantum of damages after the
Tribunal had found the FGN liable for damages. Upstream Commercial Advisory
Limited was also engaged as Federal Government Forensic Expert.
“In its final award on 31st
January,2017 but released on 10th February, 2017 the Tribunal awarded the
claimant the sum of USD6, 597Billion plus interest at the rate of 7% from 20th
March 2013.
“This award represented the
present value of the 20years income P & ID would have received for the sale
of the Natural Gas Liquid (NGL), minus capital and operating expenditures the
company would have incurred in the course of building and running the facility.
“The only dissenting opinion on
the award was from Chief Bayo Ojo (one of the arbitrators) who opined that P
& ID ought to have mitigated its loss and cannot sit and fold its arms for
20 years expecting a windfall from the government. Therefore, P & ID was
only entitled to damages for three years of operation and should therefore
receive only USD250Million. As at date, the total sum being owed to P & ID
plus interest is above USD8.4Billion.
“Upon being served with the final
award in February 2017, the HAGF on 17th March, 2017 sent a letter to the Vice
President (VP) suggesting recommendations that will resolve the situation on
the matter. The Vice President, on 18th April, 2017, approved the
recommendations of the HAGF which include a negotiation of the award with the P
& ID.
“Based on the VP’s approval, the
HAGF and Honourable Minister of State for Petroleum Resources (HMSPR) and their
delegation along with FGN counsel – Chief Bolaji Ayorinde SAN, on 16th May,
2017, met with representatives of P & ID and its counsel to negotiate the
award.
“The negotiation meeting was very
successful given that the FGN team was able to negotiate the award from
USD8.4Billion to USD600Million on the following terms:
USD100Million will be paid to P
& ID within 14 days by FGN after execution of the Stay of Enforcement of
Award Agreement.
The outstanding sum
(USD500Million) will be paid through an asset that will be determined by the
MPR.
The document explained how
President Muhammadu Buhari also intervened by approving a meeting with P&ID
counsel in New York.
“On 26 June 2018, Mr President
directed that :
The Honourable Minister of State
for Petroleum Resources (HMSPR) and the Honourable Attorney General of the
Federation (HAGF) to ensure strong efforts are made by the Federal Government
engaged Solicitor, Curtis, Mallet-Prevost, Colt & Mosle, to seek ways of
protecting the interest of the Federal Government in enforcement proceedings.
The HMSPR and HAGF to reopen
negotiations with P&ID, with a view to arriving at a settlement in the
neighbourhood of $250million in line with the recommendation/dissenting view of
the Nigerian appointed arbitrator (Chief Bayo Ojo). The settlement could be in
the form of cash and Marginal Oil and Gas Field or cash only.
The government could only offer
$250million to P&ID which was rejected by the company.
“Nigeria is favourably disposed
to a settlement of the dispute at a reasonable sum and has secured the approval
of the government thereon.
“The Nigerian government would
not consider a stand-still agreement, but would rather favour payment of a
reasonable sum in full and final satisfaction of the claim.
“The government would only
consider monetary payments to P & ID, and in this regard offered a sum of
USD250Million (Two Hundred and Fifty Million US Dollars) to P & ID which
was rejected by the P&ID.
“The offer of USD250,000,000.00
(Two Hundred and Fifty Million US Dollars) made by the Nigerian Government was
rejected by P & ID.
“After the breakdown of
negotiations, the P&ID continued with the enforcement action and
simultaneously filed an action in the United Kingdom (UK) court for the
recognition and enforcement of the arbitral Award in the UK”.
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